How PayPal could have killed an independent conference • Hacker News Board

Re: How PayPal could have killed an independent conference

#31

Post by mcantelon » Fri, Aug 12, 2011, 4:56 PM UTC

pavel_lishin wrote: post #21

Astrohacker wrote: post #16

If you accept bitcoin, then there is no third party that can freeze your account.

That's also true if you accept payment in soiled panties or puka shells, but the trick is convincing everyone involved - the venue, the speakers, the staff, and the merchants you're relying on to print t-shirts and the like - to accept this as a form of payment. Praytell, what venue accepts payment in bitcoin?

It is true that Bitcoin adoption levels don't make it feasible to rely on completely for conference registration, but it makes sense to start offering it as an option so we can gradually grow an alternative to Paypal, who has been pulling these shenanigans for years. It usually takes a day or two to convert Bitcoin to currency so there isn't a big reason not to offer it as a payment option.

Re: How PayPal could have killed an independent conference

#32

Post by Shenglong » Fri, Aug 12, 2011, 5:01 PM UTC

qeorge wrote: post #24

Shenglong wrote: post #15

Paypal also has terrible customer service. Every time I call them, I get pushed around to people who barely speak English, and just repeat things they see on a sheet of paper. To add to this, think about charge backs. Paypal doesn't even make an effort to fight for you, in the case of a Charge Back. I had a charge back NINE months after a transaction for 2 $500 amounts. Ouch. The worst part is... if you want to dispu…

Do you have an account manager? If not, you may want to request one. Our experience with PayPal has been fine since we started directing inquiries through our AM vs normal support.

That certain project is over - but I'll keep that in mind. Thanks.

Re: How PayPal could have killed an independent conference

#33

Post by ScottBurson » Fri, Aug 12, 2011, 5:04 PM UTC

ig1 wrote: post #20

zyphlar wrote: post #19

Earlier quoted context omitted.

That they let you accrue thousands or even millions in charges and then lock your account unexpectedly with poor customer service is the rub. There's no warning, just a surprise logistical nightmare that they benefit enormously from.

Imagine you were Paypal - what would you have done differently in these circumstances which wouldn't disproportionately benefit fraudsters ?

These circumstances include the fact that this business had had an account with PayPal for six years and had run hundreds of thousands of pounds through it.

If you never trust businesses that appear to be legitimate, no matter how long they maintain this appearance, eventually all your legitimate (and highly profitable) business customers will leave. That risk should be weighed against the fraud risk.

Re: How PayPal could have killed an independent conference

#34

Post by pavel_lishin » Fri, Aug 12, 2011, 5:19 PM UTC

mcantelon wrote: post #31

pavel_lishin wrote: post #21

Earlier quoted context omitted.

That's also true if you accept payment in soiled panties or puka shells, but the trick is convincing everyone involved - the venue, the speakers, the staff, and the merchants you're relying on to print t-shirts and the like - to accept this as a form of payment. Praytell, what venue accepts payment in bitcoin?

It is true that Bitcoin adoption levels don't make it feasible to rely on completely for conference registration, but it makes sense to start offering it as an option so we can gradually grow an alternative to Paypal, who has been pulling these shenanigans for years. It usually takes a day or two to convert Bitcoin to currency so there isn't a big reason not to offer it as a payment option.

By offering it as an option, you no longer have the option to not rely on it completely. What happens when everyone decides to pay in Bitcoins? I don't think the caterers will accept them as a form of payment - they'll echo Doug Shaftoe's sentiment:

" Doug’s regained his composure now, and is back to belly laughs. "What’ll that buy me? Pictures of naked girls on the World Wide Web?" "

Re: How PayPal could have killed an independent conference

#35

Post by ig1 » Fri, Aug 12, 2011, 5:22 PM UTC

ScottBurson wrote: post #33

ig1 wrote: post #20

Earlier quoted context omitted.

Imagine you were Paypal - what would you have done differently in these circumstances which wouldn't disproportionately benefit fraudsters ?

These circumstances include the fact that this business had had an account with PayPal for six years and had run hundreds of thousands of pounds through it. If you never trust businesses that appear to be legitimate, no matter how long they maintain this appearance, eventually all your legitimate (and highly profitable) business customers will leave. That risk should be weighed against the fraud risk.

Let's do a back-of-an-envelope calculation and say Paypal makes 1% of a transaction (after accounting for CC processing, etc.) - if the company in question had processed say £200,000 through Paypal then Paypal would have made £2,000 from it.

That's a fraction of the £11,000+ that they would have been on the hook for if it turns out the event had been a fake and they'd allowed the account holder to withdraw the money.

You're making the assumption that fraudsters are stupid, they're not. Fraudsters regularly try to build (or perhaps more commonly steal) accounts with reputation before using them for fraud, you can weight account history in your risk evaluation and they may well have done so in this case, but you can't let that overly influence your risk judgement as otherwise fraudsters will exploit that.

(Unless you're arguing that Paypal should be more lenient and just accept the high fraud rate as a cost of business (presumably passing it on their customers in the form of higher commissions) - in which case I agree that's a feasible route they could take, but I assume Paypal have done the analysis and figured the numbers just don't work).

Re: How PayPal could have killed an independent conference

#36

Post by ig1 » Fri, Aug 12, 2011, 5:26 PM UTC

ruby_on_rails wrote: post #27

ig1 wrote: post #14

Earlier quoted context omitted.

Paypal is primarily about small users, they're a long tail business. Any large business would just get a merchant account. What Paypal is however is a mass-market product aimed at low-risk transactions. They don't care about dealing with special case high-risk transactions, that's a fundamentally different business model which they don't want to go after. It's perfectly reasonable for Paypal to decide their own busin…

"It's perfectly reasonable for Paypal to decide their own business model." The same could be said for just about every other business that fails. And I don't believe that is reasonable to freeze transactions of business based solely on some sort of suspicion of guilt, then after it has been resolved that they are indeed innocent, continue to hold their money for months after the fact. The horror stories of paypay hav…

It's not a case of black-and-white innocent-or-not, an account has a certain level of risk associated with it and Paypal has to manage that.

Paypal didn't think they were fraudsters when they suspended their account, they thought they were high-risk. They unsuspended the account when the event organizer agreed to some risk mitigation measures (allowing Paypal to hold the money for the length of the creditcard chargeback period to let Paypal protect themselves).

Re: How PayPal could have killed an independent conference

#37

Post by ig1 » Fri, Aug 12, 2011, 5:42 PM UTC

jarrett wrote: post #25

ig1 wrote: post #10

Paypal classes events as high-risk transactions (as they require people to pay upfront often far in advance of the event) so you're at much more risk of being suspended if you breach their risk thresholds. Imagine if you're a fraudster, you've knocked up a fake event and you've sold $10k-$20k in tickets, you could withdraw the money and disappear before the date of the event. Now Paypal are on the hook for the money,…

That may be. But it's unethical for PayPal to blindside businesses. PayPal's behavior often appears arbitrary and capricious; at the very least, it's unpredictable from the customer's viewpoint. If PayPal absolutely must cut off the cash flow to its supposedly high-risk business customers, it should do two things: 1) Have a written statement of the criteria for freezing funds, demanding a 100% reserve, etc.. Make the…

The problem will releasing that information is that it gives a huge advantage to fraudsters with limited benefit to legitimate users. Fraudsters will know exactly how much fraud they can commit to stay below the radar, so they'll max out an account while avoiding detection and then move onto another account and repeat. Paypal will then have to reduce their thresholds to minimize fraud and end up hitting far more legitimate customers.

They could perhaps identify the general risk categories (i.e have a list of businesses-type which are considered high-risk). Most merchant account providers maintain such a list and you can easily find examples by googling, but I'm guessing most people who run businesses in high-fraud industries are already aware of that fact.

Re: How PayPal could have killed an independent conference

#38

Post by ltamake » Fri, Aug 12, 2011, 5:43 PM UTC

PayPal is a horrible company. They freeze accounts, hold money hostage (pretty sure illegally), refuse to delete user data (illegal in the UK), and screw smaller users over by forcing them to add bank accounts or sign up for their shitty credit card just to verify that their account is real.

Re: How PayPal could have killed an independent conference

#39

Post by Astrohacker » Fri, Aug 12, 2011, 6:02 PM UTC

pavel_lishin wrote: post #21

Astrohacker wrote: post #16

If you accept bitcoin, then there is no third party that can freeze your account.

That's also true if you accept payment in soiled panties or puka shells, but the trick is convincing everyone involved - the venue, the speakers, the staff, and the merchants you're relying on to print t-shirts and the like - to accept this as a form of payment. Praytell, what venue accepts payment in bitcoin?

What? Just sell the bitcoins and pay for things in dollars.

Re: How PayPal could have killed an independent conference

#40

Post by pavel_lishin » Fri, Aug 12, 2011, 6:27 PM UTC

Astrohacker wrote: post #39

pavel_lishin wrote: post #21

Earlier quoted context omitted.

That's also true if you accept payment in soiled panties or puka shells, but the trick is convincing everyone involved - the venue, the speakers, the staff, and the merchants you're relying on to print t-shirts and the like - to accept this as a form of payment. Praytell, what venue accepts payment in bitcoin?

What? Just sell the bitcoins and pay for things in dollars.

Hasn't the market fluctuated fairly rapidly in the past few months? I'd hate to accept $10,000 worth of conference fees in bitcoins, only to find out that I can only get $5,000 out of them. At a rate of $1,000 a day - or whatever the exchanges are limiting the daily trades to these days.